Gold Hits A 6-Month High In November

Gold appears to be gaining steam once more. Despite a dip in prices in October, gold seems to be on the road to recovery as it has managed to hit a more than six-month high.

It appears that this increase is being driven by a retreating dollar and expectations that the US Federal Reserve is done with hiking interest rates.

According to market performance as reported by Reuters, spot gold gained 1.4% at US$2,041.55 per ounce by 3:00 p.m. ET (2000 GMT). This is the highest it has been since May 10. US gold futures for December delivery settled 1.4% higher at US$2,040.

Gold rises to 6-month high based on US rate outlook

Looking at the trend, short-term outlooks for gold appear to remain rather aggressive. This is backed by the current downwards trend of the US dollar index and the hopes that the US Federal Reserve will no longer raise interest rates. Jim Wyckoff, senior analyst at Kitco Metals told Reuters that there is a possibility that the Fed might even cut interest rates by springtime.

Wyckoff does mention that if US GDP numbers and inflation indicators end up stronger, it will likely curb trader enthusiasm in the bullion. US federal policymakers appear to be comfortable with closing the year with interest rates on hold while delaying the cutting. These lower rates in turn would also lower the opportunity cost of holding non-interest-bearing bullion.

The US dollar index also reached its lowest point since mid-August, making bullion ;ess expensive for overseas buyers. 

“A sense of caution ahead of another busy week for global financial markets is also lending support to the precious metal. Given how the US$2,000 level proved an extremely tough resistance to conquer, gold could end up dipping without a potent fundamental catalyst,” FXTM senior research analyst Lukman Otunuga told Reuters.

Gold to outperform other metals in 2024

Earlier, Financial Times had also reported that the Israel-Hamas conflict had also contributed to the gold price rally. This is not unusual as gold has always been seen as a safe haven asset.

The financial news daily also shared experts forecast for gold prices to remain at record highs going into 2024.  The report forecasts for the precious metal to reach $2,100 per ounce in the fourth quarter of 2024.

For the near term, the outlook is equally aggressive due to the upcoming festive seasons with Christmas in December 2023 followed by Chinese New Year in early 2024.

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